The Social Life of Money, by Nigel Dodd, Princeton University Press, 2014, Pages 394
Review for Business World by Shankar Jaganathan, Author & by passion an Economic Historian, March 2015
Like cricket in India, money is the subject of discussion in both professional and amateur groups across the world. These discussions often get heated, and their circles expand in the context of prominent headline hogging events. In these debates, we often see a visible and pronounced bias linked to origin. The ongoing Cricket World Cup 2015 is a good example. Team India garnering large support wherever they play is directly traced to people of Indian origin sprinkled across the world. Likewise, are our views on economic issues too colored by what we think is the trigger for emergence of money?
In his book, The Social Life of Money, Nigel Dodd examines alternate theories on the origin of money and its implications in the face of 2008 global financial crisis. Dodd argues the popular theory of money emerging from barter exchanges looks logical but may not be historically valid. Reinforced by economic textbooks and popular folklore, barter giving way to money is elegant and simple but overemphasizes an economic view that ignores and dilutes social, religious and political aspects of human life.
Dodd highlights how a narrow economic view can significantly limit the options for resolving challenges. The 2008 global financial crisis is a case in point. Viewed through the economic lens of barter being the trigger for emergence of money, the crisis was seen as liquidity drying up and hence resolved by infusing significant quantity of money to the lenders as loans and guarantees. Further liquidity was continuously added into the system by adopting Quantitative Easing as a monetary policy in the USA. An alternative solution could have been to exempt the stressed borrowers from repayment, as would have been the case during Biblical times when the Jubilee year was periodically celebrated by cancelling debts. Could this solution have restored economic vitality faster to the global economy and benefitted more people? A moot point to consider given the public money used.
This book offers significant insights by looking at routine economic events and policy responses though a non-economic lens. An illustration of it is the case of author viewing governments pursuing austerity measures as internal devaluation, i.e. an alternative to ‘currency devaluation’ that reduce domestic purchasing power to trigger growth and concludes that it is an expensive option as the cost is contained within the economy and borne by the vulnerable sections of society.
In the context of the predominantly economic view prevailing today, Dodd does the unexpected by viewing money through a framework of alternate paradigms that were and are used by sociologists and political theorists to show us what we could be missing. Significant one among them is viewing all obligations as monetary debts. By converting social and political debts into monetary terms, are we reducing the social and political bonds in our society to pure money value to be discharged by parting with a few currency notes?
Accessing the richness of this book needs considerable investment of time due to two factors. First, the author’s desire to trace each of the theories to its origin and highlight the insights provided by each contributor is remarkable for its authenticity but slows down the reading pace by pulling in different directions. Further each of the chapter outlining a different theory of money covers diverse concepts that makes continuous reading difficult.
Despite this, readers interested in understanding money should pick up this book as it goes beyond a historical narrative analyzing the past. In fact, the richness of this book is in its ability to orient our thinking on the new emerging currencies like bitcoins, digital money and mobile currency. This aspect could be of special interest in India, where the e-commerce market is rapidly growing both in value and the number of participants.
